Lawyers fined for online porn lawsuits

A group of lawyers that made millions of dollars putting online viewers… (Kirk McKoy, Los Angeles…)

A group of lawyers that made millions of dollars putting online viewers of pornographic films in the courtroom hot seat may soon be feeling the heat of federal investigators.

U.S. District Judge Otis D. Wright II in Los Angeles found that Prenda Law Inc., four lawyers and related companies repeatedly deceived the court in a copyright infringement case and said that he would refer the matter to state and federal authorities.

Wright said in a court order assessing $81,320 in legal fees and penalties that he would ask the U.S. attorney's office, the Internal Revenue Service and federal and state bar associations that oversee lawyer discipline to look into the Prenda operation.

Prenda and its lawyers sought "easy money," the judge said, by suing Internet users who downloaded several pornographic movies without paying for them.

For The Record Los Angeles Times Thursday, May 09, 2013 Home Edition Main News Part A Page 4 News Desk 1 inches; 40 words Type of Material: Correction Prenda sanctions: In the May 8 Business section, an article about court findings against Prenda Law Inc. and its lawyer-owners misspelled the last name of the attorney for several people sued by Prenda as Morgan Pieta. It is Morgan Pietz.

The law firm and related companies, he said, bought the copyrights solely for the purpose of tracking Internet usage and filing lawsuits aimed at quick settlements of about $4,000 a case.

Calling Prenda and related parties a "porno trolling collective," Wright said in his order released late Monday that they made false statements in court documents, failed to pay income taxes and used a stolen identity to secure a copyright.

"Plaintiffs do have a right to assert their intellectual property rights, so long as they do it right," Wright said. "But plaintiffs' filing of cases using the same boilerplate complaint against dozens of defendants raised the court's alert."

Morgan Pieta, a Manhattan Beach attorney for several Prenda defendants, said the judge's ruling "was absolutely devastating for the plaintiffs."

Thom Mrozek, a spokesman for the U.S. attorney's office in Los Angeles, declined to say whether his office had received Wright's referral or planned to investigate.

One of the lawyers in the case, John Steele, said he intends to appeal the judge's ruling.

"We have appellate courts for a reason. Nobody's perfect. In this case, I think the judge was misled by others," Steele, 42, said by phone from Miami. "There's going to be a lot of egg on people's faces."

He denied that he had an ownership stake in the firm or the related companies, Ingenuity 13 and AF Holdings. Other lawyers named in the order, Paul Hammier, Paul Duffy and Brett Gibbs, could not be reached for comment.

Wright laid out the basic methods used by Prenda and the lawyers he said were the principals of the firm and the related companies.

By monitoring traffic on the file-sharing website BitTorrent Inc., the lawyers identified IP addresses used to download pornographic movies. Then the companies sued people whose IP addresses were used to view the movies, offering to settle for less than the cost of defending themselves.

Prenda Law filed the lawsuits on behalf of several companies, including Ingenuity 13 and AF Holdings, that held copyrights to pornographic films.

The judge said Gibbs, a Prenda Law attorney, falsely claimed in a court filing that a person whose IP address was used to view a pornographic movie lived in "a very large estate consisting of a gate for entry and multiple separate houses," evidence that a neighbor could not have intercepted a wireless signal.

The statement was a "blatant lie," the judge said, noting that the West Covina home was a "small house in a closely packed residential neighborhood."

Wright said Gibbs, Steele, Hammier and Duffy "suffer from a form of moral turpitude unbecoming of an officer of the court."

The lawyers had refused to answer many of Wright's questions at a previous hearing, citing their 5th Amendment protection against self-incrimination.

Wright said the lawyers abused the legal system in suing people too embarrassed to defend themselves. He said their use of false statements amounted to fraud and may have violated federal organized crime laws.

The Mill Valley, Calif., telephone number Gibbs listed with the court is disconnected. His email account sent an automatic response: "I am pursuing new ventures and no longer working with Prenda Law Inc."

Prenda Law initially had sought to dismiss the lawsuit, but the judge ordered the company's lawyers to return to his courtroom to answer his questions.

Wright concluded that the lawyers and the companies had been taking advantage of copyright laws to enrich themselves unjustly.

"Copyright laws originally designed to compensate starving artists allow starving attorneys in this electronic media era to plunder the citizenry," Wright said.